Oil Price Technical Forecast: WTI in Free Fall

Crude Oil Technical Forecast: WTI Weekly, Daily & Intraday Trade Levels

Oil price plunge more than 21.4% off July high- breaks multi-year consolidation pattern
WTI risk for further losses- first major technical hurdle in view- CPI, FOMC on tap
Resistance 71.33/92, 74.39 (key), 77.65- Support 65.62-66.57 (key), 63.63, 60.31

Oil prices have plummeted more than 21.4% off the July highs with WTI breaking below a multi-year consolidation pattern. The decline is now approaching the first major technical hurdle and although the broader outlook remains weighted to the downside, the immediate decline may be vulnerable into this threshold. These are the updated targets and invalidation levels that matter on the weekly, daily, and 240min WTI technical charts.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this crude oil setup and more. Join live on Monday’s at 8:30am EST.

Oil Price Chart – WTI Weekly

Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView

Technical Outlook: In last month’s Oil Price Forecast we noted that WTI had, “plunged into the lower bounds of a multi-year consolidation pattern with the bulls defending yearly-open support this week- the focus is on possible inflection off this pivot zone. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – rallies would need to be limited to the 200DMA IF price is heading lower on this stretch with a close below the yearly open needed to fuel the next leg.”

Oil rallied nearly 8.6% off the lows before exhausting just cents from the 200-day moving average days later. The subsequent reversal broke below key support last week with WTI plunging more than 13.4% off those highs. The break below the 2023 consolidation pattern keeps the outlook weighted to the downside while below the objective yearly open at 71.33 with the next major technical confluence already in view.

Oil Price Chart – WTI Daily

Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView

A look at the daily chart shows the decline trading near the December lows at 67.69 with price straddling the median-line of the descending pitchfork we have been tracking off the yearly highs. A key lateral support confluence is seen just lower at 65.62-66.57 – a region defined by the 2020 high, the 2023 close low, and the 2019 high. Look for a larger reaction in price there IF reached.

Oil Price Chart – WTI 240min

Chart Prepared by Michael Boutros, Technical Strategist; WTI on TradingView

A closer look at oil price action shows WTI struggling at the median-line with the weekly opening-range straddling this slope. Resistance is eyed back at the objective yearly open / August low-day close (LDC) at 71.33/93. Broader bearish invalidation is now lowered to the objective September range high at 74.39 with a breach above the upper parallel ultimately needed to suggest a more significant low is in place / reversal is underway.

A daily / weekly close below this 65.62 is needed to mark downtrend resumption with subsequent support objectives eyed at the 2023 swing low at 63.63 and the 100% extension of the 2023 decline at 60.31 (both areas of interest for possible downside exhaustion IF reached).

Bottom line: Oil plummeted through key support last week and cleared a multi-year consolidation pattern- the technical outlook remains weighted to the downside while in this formation. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards 65.62- rallies should be limited to the 71.92 IF price is heading lower on this stretch with a close below this pivot zone needed to mark downtrend resumption.

Keep in mind we get the releases of key US inflation data tomorrow (CPI) with the highly anticipated FOMC interest rate decision on tap next week – stay nimble into the releases and watch the weekly closes here. We’ll review these charts in-depth in the Weekly Technical Outlook Webinar on Monday morning.

Active Weekly Technical Charts

--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on X @MBForex

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.